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HMRC internal manual

Capital Gains Manual

Arrival in and departure from the UK: transfer to émigré spouse or civil partner under no gain/no loss rule

In this type of case, a husband or wife or a civil partner owns a valuable asset which he or she wishes to sell. The spouse or civil partner of the owner of the asset is leaving the United Kingdom - probably for a limited period such as a fixed term employment abroad. The owner transfers the asset to the departing spouse or civil partner prior to departure and claims the protection of TCGA92/S58. The asset is subsequently sold by the transferee after the date of departure. This tactic was adopted - unsuccessfully - in the case of Regina v HM Inspector of Taxes, Reading ex parte Fulford-Dobson (60 TC 168). In this case the transfer of the asset and its subsequent sale occurred in the same tax year.

For the years up to and including 2012-13 cases of this type need to be distinguished from those where the transfer to the non-resident spouse or civil partner is made after that spouse or civil partner has become non-resident and in a year throughout the whole of which that spouse or civil partner is non-resident. In such cases the benefit of Section 58 can effectively be obtained as a result of the decision in Gubay v Kington (57 TC 601), see CG22300+.

With the introduction of the Statutory Residence Test for 2013-14 onwards the individuals residence position for the year or residence period in which they make the disposal will determine if the gain can be charged to CGT.